SINGAPORE (Oct 9): Public transport operators could see an annual revenue increase of $132.5 million, after the Public Transport Council (PTC) on Tuesday granted the full 7% increase in in fares.
The PTC says the fare hike is driven by a spike in fuel and energy costs.
From Dec 28, commuters using adult EZ-Link and other cards can expect to pay up to 9 cents more per journey. Senior citizens, low-income workers, persons with disabilities and students will see the smallest increase of 4 cents per trip.
This means for an average journey of 10km, adult card fares will increase from $1.39 to $1.48, while that for senior citizens will rise from 88 cents to 92 cents.
Monthly concession passes will also go up between $1.00 and $5.50, while the adult monthly travel pass will go up by $8.00.
The highest increase of 20 cents per journey will be imposed on visitors or infrequent users who buy single-use tickets.
For the first time, however, polytechnic students will be included in the student concession fare, saving them up to $1.54 per trip. More than 80,000 polytechnic and other diploma students are expected to benefit from the cheaper fares
The PTC, in considering the fare adjustments, says it continued to safeguard the interest of the concession groups. Around two million commuters, or over 1 in 2 Singaporeans, will see a lower fare adjustment of 4 cents and below.
“To further help lower-income households, the PTC will mandate SBS Transit and SMRT to contribute about $3.89 million ($1.88 million and $2.01 million respectively), to the Public Transport Fund. This is more than double last year’s contribution of $1.75 million,” it adds.
The fund will be utilised to provide 50% more public transport vouchers (from the current 300,000), and increase the value of each voucher to $50 from $30.
Richard Magnus, PTC chairman, says public transport systems in many countries face the challenge of narrowing the gap between operating costs and fare revenue.
See: Public transport operators unlikely to benefit much despite up to 7% fare hike this year
“Some of these countries adopt a more purist approach in balancing cost and sustainability. This is not our approach,” he adds. “The government, public transport operators, and commuters are stakeholders here. We have a transparent and objective fare formula that allows us to cap the fare increase and balance sustainability with fare affordability for Singaporeans.”
Magnus says he believes the PTC has arrived at an equitable, carefully calibrated and delicate balance in its fare decision.
Andy Sim, an analyst at DBS Group Research, notes that the fare increase will be positive for the two rail operators – ComfortDelGro Corporation subsidiary SBSTransit Rail, and SMRT Trains.
However, there will be no impact on transport operators’ bus revenues, as it is now under the Bus Contracting Model.
“The increases in annual revenues for SBSTransit Rail and SMRT Train amount to $18.8 million and $40.2 million respectively,” Sim says in a flash note on Tuesday.
“We now estimate that the 7% increase in fares could add on about 3-4% to our ComfortDelGro’s forecast for FY20F,” he adds.
The research house is keeping its “hold” call on ComfortDelGro with an unchanged target price of $2.59.
See: Headwinds expected for ComfortDelGro despite potential fare hike
“While the fare increase should lead to an improvement in [ComfortDelGro’s] rail operations, we continue to expect the positive effects to be partially negated by the challenges it currently faces in its taxi operations,” he says.
Sim notes that ComfortDelGro’s taxi fleet continues to contract, and now stands at close to 11,200 as at July 2019. Year-to-date, the average fleet is down 7% from the same period a year ago.
“We believe competition remains keen and could pose downward pressure on taxi margins. In addition, the continued GBP weakness should also lead to lower contribution from its UK operations when translated into SGD.”
As at 4.10pm, shares in ComfortDelGro are trading 2 cents lower at $2.40.
